NetScout Systems, Inc. (NTCT): Hedge Funds and Insiders Are Bearish, What Should You Do?

NetScout Systems, Inc. (NASDAQ:NTCT) has seen a decrease in activity from the world’s largest hedge funds in recent months.

In the 21st century investor’s toolkit, there are dozens of gauges shareholders can use to monitor publicly traded companies. A duo of the most useful are hedge fund and insider trading movement. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the top investment managers can trounce the market by a significant amount (see just how much).

Equally as integral, optimistic insider trading activity is a second way to parse down the marketplace. As the old adage goes: there are lots of stimuli for an upper level exec to sell shares of his or her company, but just one, very clear reason why they would behave bullishly. Many academic studies have demonstrated the impressive potential of this tactic if “monkeys” understand what to do (learn more here).

Keeping this in mind, let’s take a look at the recent action surrounding NetScout Systems, Inc. (NASDAQ:NTCT).

Hedge fund activity in NetScout Systems, Inc. (NASDAQ:NTCT)

At Q1’s end, a total of 14 of the hedge funds we track held long positions in this stock, a change of -13% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their holdings considerably.

Of the funds we track, Eric Bannasch’s Cadian Capital had the largest position in NetScout Systems, Inc. (NASDAQ:NTCT), worth close to $13.3 million, accounting for 0.4% of its total 13F portfolio. Sitting at the No. 2 spot is Invicta Capital Management, managed by Gregory A. Weaver, which held a $9 million position; the fund has 4.1% of its 13F portfolio invested in the stock. Some other peers that hold long positions include Jim Simons’s Renaissance Technologies, Brian Ashford-Russell and Tim Woolley’s Polar Capital and Israel Englander’s Millennium Management.

Judging by the fact that NetScout Systems, Inc. (NASDAQ:NTCT) has witnessed a declination in interest from the entirety of the hedge funds we track, it’s easy to see that there was a specific group of fund managers who were dropping their full holdings last quarter. Intriguingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dropped the biggest position of the “upper crust” of funds we monitor, worth an estimated $2.8 million in stock.. D. E. Shaw’s fund, D E Shaw, also cut its stock, about $1 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 2 funds last quarter.

Insider trading activity in NetScout Systems, Inc. (NASDAQ:NTCT)

Insider purchases made by high-level executives is best served when the company we’re looking at has experienced transactions within the past half-year. Over the latest half-year time frame, NetScout Systems, Inc. (NASDAQ:NTCT) has seen zero unique insiders buying, and 2 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to NetScout Systems, Inc. (NASDAQ:NTCT). These stocks are Interactive Intelligence Group Inc (NASDAQ:ININ), MicroStrategy Incorporated (NASDAQ:MSTR), Bottomline Technologies (NASDAQ:EPAY), and Pegasystems Inc. (NASDAQ:PEGA). This group of stocks are in the business software & services industry and their market caps resemble NTCT’s market cap.

With the results demonstrated by our research, retail investors should always watch hedge fund and insider trading sentiment, and NetScout Systems, Inc. (NASDAQ:NTCT) shareholders fit into this picture quite nicely.

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